Firms still need certainty and time to implement FCA’s Consumer Duty

15 February 2022

Firms still need certainty and time to implement FCA’s Consumer Duty

PIMFA, the trade association for wealth management, investment services and the investment and financial advice industry, has today called on the Financial Conduct Authority (FCA) to give firms further time to fully understand and implement its wide-ranging Consumer Duty proposals.

In its response to the FCA’s consultation ‘A new Consumer Duty: feedback to CP21/13‘ and further consultation, PIMFA argues that while the FCA’s updated proposals carry more clarity for firms, there is still significant scope for subjectivity within them.

More broadly, PIMFA argues the proposed implementation period of nine months is insufficient and does not reflect the importance the FCA has itself placed on the Duty’s wider impact on financial services.

Liz Field, Chief Executive of PIMFA, commented: “In our ongoing discussions with the FCA we have consistently asked for further clarity on the proposals that they have put forward. To their credit, this updated package of measures, in combination with the draft guidance produced, is clearer on the FCA’s expectations of firms.

“However, there is still scope for further clarity, and we have asked for updated guidance on a number of issues, as well as explicit statements of the expectations of firms. Throughout this process we have been clear our concerns around the Consumer Duty are less about the ability of firms to comply with it on an ongoing basis and more about the broader implementation challenge associated with, and the inherent subjectivity of, the proposals.

“We do not believe a nine-month implementation period is sufficient for firms to ensure the systems and processes they have in place are sufficient both to measure consumer outcomes and provide the level of reporting distributors will now have to send upstream to manufacturers. This is an industry which has undergone an enormous amount of regulatory change recently which, in combination with the ongoing impact of COVID-19, means resources are already stretched. We believe a two-year implementation period would be more suitable and are aware of other industries with even bigger implementation challenges who agree.

“Meanwhile, the inherent subjectivity of the proposals does remain a concern especially with respect to the application of the Duty by the Financial Ombudsman Service (FOS). We already have long-standing concerns about the lack of alignment between the FOS Handbook and that of the FCA. While we think it is right that the FCA have set their expectations to the FOS, we draw little comfort from this given it has no obligation to act upon these expectations. Ultimately, it is our uncertainty about how FOS will interpret the Duty and, in particular what is reasonable, which will drive whether or not the implementation of the Duty will ‘raise the bar for financial services’ more generally or simply open the floodgates for claims against an industry, which continues to do its best to provide good outcomes for consumers”

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NOTES TO EDITORS

About PIMFA – the Personal Investment Management & Financial Advice Association

• PIMFA is the trade association for firms that provide investment management, investment services and advice to everyone from individuals and families to charities, pension funds, trusts and companies.
• The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
• PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies.  Associate members provide professional services to the PIMFA community.
• PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
• PIMFA has made numerous recommendations to the FCA regarding the Future of Advice, the Future of Supervision, & the FSCS levy – read more.
• PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
• Further information can be found at pimfa.co.uk

Contact

For further information on this release or other press matters please contact:

• Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376
• Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869 / +44 (0)7979 493225